Oil Prices Rise but Stay Below $100 as Traders Weigh Iran Diplomacy, Supply Outlook — Update

By Farhan Rafid

Oil prices rose Thursday but remained below $100 a barrel following a sharp selloff in the previous session as traders assessed the outlook for U.S.-Iran relations and recovering oil supplies from the Middle East.

Front-month Brent crude, the global oil benchmark, rose 1.3% to $95.85 a barrel in European trading. West Texas Intermediate, the U.S. benchmark, gained 0.3% to $87.36 a barrel.

Both benchmarks plunged more than 8% Wednesday after Democrats won control of Congress in the U.S. midterm elections, amid expectations the outcome could increase pressure on President Trump to pursue a diplomatic resolution to the Iran conflict.

The premium for near-term Brent crude deliveries has narrowed sharply as traders price in a greater possibility of a diplomatic resolution to the Middle East conflict, according to MUFG. The spread between the nearest Brent futures contracts has fallen below $2.50 a barrel from more than $5 in mid-October, suggesting that concerns about immediate supply shortages have eased.

The Democratic victory could make further military escalation politically more costly for Trump, while increasing pressure to reach an agreement that would restore energy shipments through the Strait of Hormuz, according to Rystad Energy. However, the incoming Congress won't take office until Jan. 3, leaving the possibility of renewed military action before then, the consultancy said.

Meanwhile, the global oil market is moving back into surplus as Middle Eastern exports recover and demand weakens, according to J.P. Morgan. The bank estimated that supply exceeded demand by 1.1 million barrels a day in September, with the surplus widening to 1.4 million barrels a day in October.

Middle Eastern oil exports recovered to around 20.7 million barrels a day in October from a low of 9.8 million barrels a day in March, J.P. Morgan said. The bank also estimated that global oil demand had declined by 3.3 million barrels a day since the conflict began, reflecting the impact of higher fuel prices and supply disruptions.

Still, the recovery in exports has yet to fully restore regional energy flows, with security threats and elevated shipping costs continuing to complicate shipments through the Strait of Hormuz.

U.S. crude inventories fell by 865,000 barrels to 409.8 million barrels last week, according to data released Wednesday by the Energy Information Administration. Distillate inventories dropped by 3.6 million barrels to 99.3 million barrels, pointing to continued tightness in fuel markets.

Write to Farhan Rafid at farhan.rafid@wsj.com

(END) Dow Jones Newswires

November 05, 2026 05:49 ET (10:49 GMT)